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All set for a clear summer

There was an interesting footnote to the FT article on NYSE Euronext’s final shareholders’ approval of the ICE deal yesterday. It talked about how ICE Clear will be taking over clearing for Liffe as of 1st July. This is more than just a bit of corporate housekeeping and may well shape whether we really see competition in European derivatives trading.

Right now Liffe clears through LCH and yes, this is the same clearing house that Nasdaq’s new derivatives market NLX will be using. So there is a big pile of open interest sitting at LCH which will either have to migrate to ICE Clear or stay where it is and provide a great boost to NLX. I know it’s more complicated than this as the Liffe/LCH deal is separate from LCH’s other clearing operations. But, nevertheless, it’s an intriguing possibility as the derivatives industry struggles to aggregate margin and risk post Dodd-Frank. Either way, NLX may just find that their timing is spot on.

One Response to “All set for a clear summer”
  1. With many estimating a collateral shortfall in the region of $1-3 trillion, finding portfolio margining opportunities and collateral efficiencies is key in the new regulatory environment. It is exactly for this reason that NLX supports a horizontal clearing model and has chosen LCH.Clearnet to clear all products. This approach facilitates the ability to portfolio margin both ends of the curve immediately, and has the potential for cross-margining of additional correlating products within LCH.Clearnet in the future. When you look to the Futures, timing is always important…

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